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Burden of high power costs

Nuku'alofa, Tonga

Dear Editor,

I have noted the public outcry over the recent increase in the price of electricity and thought you might consider the following.

Power in Tonga is generated entirely with imported automotive diesel whose price in July 2004 was 54 cents/litre. As a result of several factors which happened in or around September, mainly four consecutive typhoons in the Gulf of Mexico which significantly cut American domestic production, political instability in Nigeria which similarly cut Nigerian production and a genuine fear that American domestic reserves would not be able to meet the winter demand, Brent Crude went to $54 a barrel which translated to an imported price of 89 cents/litre in Tonga.

The recently elected President of the United States has adopted certain economic policies with which I shall not bore you at this stage but which has resulted in a weakening of the US dollar against most major currencies. The Nymex price today had dropped to $43.41, a drop of 77 cents in a day while Brent futures had last registered at $40.11 in expection of a mild winter in the United States. It was an attempt to stem this decline that OPEC had voted last month to cut production by a million barrels a day.

In spite of the rise of approximately 29 cents/litre for Tonga’s imported oil, Shoreline asked the Tonga Electric Power Board for a temporary rise of 13 cents in the retail price and was granted 11 cents.

Perhaps because oil imports are subject to price control in this country, the two major oil companies serving Tonga choose not to import marine diesel which is not only about 25% cheaper than automotive diesel, but can be used by our generators which shall result in a major reduction in the retail price. As 75% of our oil imports are used for power generation, this attitude strikes me as antagonistic.

One solution would be for Tonga to import its own Marine Diesel for power generation as well as its domestic shipping. The required investment in a pipeline and tank farm is both sound and affordable (less than $10 million).

In my opinion, considering the substantial forces arraigned against the non-oil producing countries by major global financial forces, any claims by certain unethical political candidates to provide, at a stroke, a panacea for the burden of high power costs are false and discussion of how miserable we all feel instead of a solution a waste of time.

Yours always,


Tuesday, 28 Dec 2004.


Compare high power costs to other islands - Edgar Cocker
A public outcry, in a pure democratic society has always been an indication of recognition, a sign of respect, a motive for improvement, an affection for equality and unity, and a symptom of sharing (feveitokai'aki).

I read the rather comprehensive letter submitted by the Crown Prince regarding the rising cost of electricity in Tonga. Deep in my heart, I salute the Crown Prince for the excellent statement he made. His elaboration has triggered the fact that global circumstances have always been the determining factor of why the price of oil fluctuates at global level. Being an economist, one cannot dispute the fact that “supply and demand” usually calls for the shot/ catch of the day.

Based on my sources, while working for the US Department of Agriculture (USDA) and dealing with energy gimmicks we must perform to standards. The Brent Crude Oil price will always fluctuate based on numerous factors. The bombing in Iraq and the Middle East, the great demand for heating fuel due to freezing temperature at US mid East to East Coast and to almost 80% of US and Europe, and to many other factors. As the figures varies on daily basis, the IPE Brent Crude oil price fell from an average of 49.35 per barrel in October 2004, to 44.65 BBL in November to 40.34 …– 40.29 BBL in December. The price will drop further in February 2005. In London, the February Brent crude-oil futures contract shed 60 cents to 40.11 dollars a barrel last Friday.

Anyway, the point is, there are only a few of us who understand the language of petroleum, and only few can understand the complicated terminology used to clarify the public outcry.

In my view, I would rather urge the candidates and the researchers in Tonga to please investigate and compare the price of electricity to the price in Samoa, Fiji, Kiribati, Vanuatu, and Solomon Islands. These neighbouring island countries have more consumers, more people, higher overhead costs, and higher indirect costs than Tonga. If their prices are lower than us, then I guess there is a legitimate issue to discuss, otherwise we need to focus more on applied scientific research. Let…’s do that and see why the public outcry is being substantiated.

As a food for thought, let'’s not go too far to the extreme of comparing to the global market, but explore the nearby options and see if our electrical cost is really higher or lower than our neighbouring countries especially Fiji and Samoa. I would also like to hear from the view of the Petroleum Adviser of the Pacific Islands Forum Secretariat in Fiji and see what he has in his “so called regional Taputa.” Get him to contribute to this public outcry or otherwise let me make him. -
Edgar Cocker, Associate Director, Cooperative Research, Education and Extension Services (CREES) USDA, Saipan.